Townhome vs SFH

[Will Canady]

I'm considering a townhome for a rental property. Entry cost is significantly lower, hoa is low for a townhome community, and rent estimate is stronger than comparable SFH in the area.

Does anyone have experience with townhome rentals? What should I be looking for, cautious about, etc. 

[Michael Dumler]

@Will Canady, piggybacking off others here: for townhome investments, you're definitely at the mercy of the HOA board and dues, which can both cap rental potential and eat into your cash flow. Like Juan said, this really comes down to strategy. Personally, when it comes to townhome acquisitions, you want to find that balance with an HOA that does cap rental units. Oddly enough, those tend to be the communities that are better maintained and attract a stronger tenant pool. On the flip side, when there are no caps, the community often gets flooded with investors, the overall condition slips, and that can drag down appreciation potential over time.

Needless to say, there are always going to be trade-offs. As with any deal, if you’re leaning toward townhomes, just make sure the acquisition is strategic and aligns with your long-term goals.